Escondido chamber building purchase plan criticized

Community leaders are sharply divided over a proposal to have the city help the Escondido Chamber of Commerce get out of debt by purchasing the chamber’s building for $550,000.

The City Council is scheduled to debate and possibly approve the proposal at its weekly meeting beginning at 4:30 p.m. today in City Hall, 201 N. Broadway.

Since city officials made the proposal public in early March, critics have called it a “sweetheart” deal that would force taxpayers to clean up a financial mess that should be the chamber’s obligation.

They’ve also questioned whether it’s ethical for the City Council to approve the deal when two of its five members are former leaders of the chamber, and when two others have strong ties to the organization, a private business group.

Chamber officials have called the deal a “win-win” and an appealing investment for the city and its taxpayers.

The chamber would slowly buy the building back over 20 years with monthly payments of $3,100. The payments, which include 3 percent interest, would amount to $717,000.

Last week, chamber chief executive Les Abshire sent a 1,200-word email to members defending the deal and saying the chamber’s financial problems have been exaggerated.

The email also said the ethics of council members shouldn’t be questioned because the proposal is a “sound business decision.”

Critics of the proposal said they plan to lobby the council today with a long list of complaints about the deal’s financial elements, and by raising some legal questions.

Leaders of Escondido’s Future, a citizens group focused on quality of life, sent City Attorney Jeff Epp a letter this week contending that the council violated the state’s open meetings law by discussing the deal this winter in a session closed to the public.

Escondido’s Future says state law allows real estate deals to be discussed in closed session, but not a loan from the city to the chamber. And they say Mayor Sam Abed has described the deal as a loan.

Resident Bruce Sims wrote Epp a separate letter contending that Abed and Councilman John Masson, who both previously served as chamber chairmen, should abstain from voting on the deal because they have a conflict of interest.

In Epp’s response, he said such conflicts are “difficult to measure.” But he said the city would explore the issue if Sims provided more detail about his concerns.

“That type of activity is not normally going to result in a conflict of interest,” Epp wrote. “Endorsements are common, and in many cases not even controlled by the person seeking election.”

In Abshire’s email to chamber members, he said it would be unfair and unwarranted to prevent council members with chamber ties from voting.

“We are proud that some of these leaders are now providing leadership to the city,” he wrote. “It is the duty of this council to make sound judgments regardless of association.”

On the finances of the deal, Councilwoman Olga Diaz has said the city is being too generous with the chamber.

She said city officials recently estimated that the 4,700-square-foot chamber building, on Broadway just north of downtown, would rent for about $6,000 a month — not $3,100.

She also criticized the proposal for allowing the chamber to delay rent payments for six months so the organization can solve a cash-flow problem and begin building some reserves.

UT-San Diego columnist Kirk Effinger wrote a column last week contending that prevailing commercial loan rates indicate the city should get 4.75 percent interest instead of 3 percent.

But Abshire, the chamber CEO, wrote in his email to members that 3 percent was double the city’s usual 1.5 percent return on its investment portfolio.

He also called the investment safe because the city would own the chamber building if the organization goes bankrupt. He estimated the building was worth $900,000, but no appraisal was done as part of the proposal.

Mayor Abed and Councilman Gallo have called the deal a prudent use of city resources to help out a key civic institution.